Insurance companies have won a landmark case in the House of Lords that will limit employers’ liability for payouts to staff who developed asbestos-related cancer while working for them.

This means compensation payouts to sufferers of the fatal lung disease, mesothelioma, and their families will be drastically reduced in many cases and could save millions of pounds for employers.

The House of Lords upheld three test appeals in which it was argued that damages awards should be limited in cases involving several former employers, none of whom could be specifically blamed for the onset of the disease.

About 1,900 people die in the UK each year from mesothelioma.

Four years ago, in a similar claim, law lords ruled that an employer who negligently exposed a worker to asbestos could be held 100% liable even if the employee had worked for several companies and it could not be proved which of them had caused the illness.

In this appeal, it was contended that an employer’s liability should be limited on a percentage basis to reflect the extent to which it contributed to an employee’s exposure to asbestos.

Lord Hoffmann said the justification for the “joint and several” 100% liability rule established in the earlier Lords case was that, if someone caused harm, there was no reason why his liability should be reduced because someone else also caused the same harm.

But the same considerations did not apply when a person “may” have caused harm. Fairness suggested that, if more than one person “may” have been responsible, liability should be divided according to the probability that one or other caused the harm, he said.

Tom Brennan, regional secretary of the GMB, said the union would now call on government to introduce legislation “so that our members and dependants get the full compensation they deserve”.

“This decision does not do justice to all those who have suffered incapacity, death from exposure to asbestos whilst carrying out their every day job,” he said.